July 25, 2019

Daily Market Review – Thursday, July 25, 2019

Daily Market Review – Thursday, July 25, 2019

Asia

Asian shares are moderately optimistic this morning on hopes of an ECB interest rate cut later this morning. Except New Zealand’s 1.18% increase, though, most increases are between the 0.15% (Nikkei) mark and 0.59% (China’s A50-FTSE). Adding a smidgeon of optimism, US and Chinese negotiators will resume their efforts next week.

Europe

The Euro lost another 20 pips yesterday after Markit confirmed EU manufacturing was in a rut, contracting another point and a quarter to 46.4. Although the Dax managed to add a quarter percent, both the CAC and FTSE lost ground, the latter to the tune of a resounding 0.73%. Manufacturing PMIs from France and – more dramatically – Germany explain the matter, with the former about to leap into contraction at a level 50 and Germany deep into it, at 43. With 90 days till Brexit, Boris Johnson made the most of his first hour in office by firing 18 Cabinet members whose loyalty to a no-deal Brexit was in doubt. So far, Reuters reports, a trillion dollars’ worth of assets and a quarter trillion in daily trading volumes have moved out of London’s financial sector to Milan, Amsterdam and other locales as the UK’s access to EU markets remains in doubt.

US

Tech shares led the Nasdaq 100 up 0.85% yesterday, while the DOW lost a third percent on closing, due to losses from Caterpillar and Boeing. Meanwhile, on the news front, the main takeaway from Special Counsel Robert Mueller’s report to Congress yesterday was that President Trump tried to obstruct justice by having him fired and by ordering White House staff to falsify documents. In addition, he claimed that Russia had interfered in the 2016 elections in a “sweeping and systematic fashion”. And still the dollar awaits next week’s Fed meet. A Reuters poll indicates that over 95% of respondents expect a quarter percent interest rate cut next week for the first time in a decade. The same report indicates a 1.8% increase in Q2’s GDP, compared to 3.1% in Q1. Yesterday’s data shows manufacturing on the 50-point border of contraction and new home sales disappointing at 646K.

Commodities

WTI lost more than a dollar a barrel yesterday despite the EIA’s confirmation of a 10.8mB drawdown, as geopolitical influence upon expected demand continues to weigh prices down.

Corporate

GE, now hopefully confirming an end to its 2-year downtrend, will be paying dividends today, this while US indexes are at record highs as 78% of companies reporting quarterly earnings so far exceed expectations. AT&T managed to surprise earnings to the upside, despite the departure of TV subscribers to streaming services. Facebook shares are almost at their 1-year high, as revenues beat expectations by $0.4bn, despite the company’s as-yet-unpaid $5bn fine on privacy infringements and continued attacks upon its Libra endeavour. The DOW, however, was severely damaged by Caterpillar’s 2.8% drop in revenues YoY and Boeing’s 3% drop, as downed MAXes and delayed 777s cost the company $2.94 bn, so far, with sales down 35% YoY. Tesla dropped 11.5% after the company’s deliveries improvement comes in at the expense of net profits – this on revenues that are up 60% YoY! Today, expect data from McDonalds, Google, Amazon, Intel and Total, with Twitter in on Friday.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
08:00 AM GMT – Germany IFO – Business Climate & Expectations (Jul)
08:00 AM GMT – Italy Trade Balance non-EU (Jun)
10:00 AM GMT – UK CBI Distributive Trades Survey (Jul)
11:45 AM GMT – EU ECB Interest Rate Decision. Policy Statement and Press Conference at 12:30.
12:30 PM GMT – US Continuing & Initial Jobless Claims, Wholesale Inventories (Jun)PRELIMINARY, Goods Trade Balance (Jun), and Durable Goods Orders (Jun).
23:30 PM GMT – Japan Tokyo Consumer Price Index (Jul)

For more, visit our Economic Calendar